Net zero will be an economic, business and people transition!

To avoid the worst climate impacts, global greenhouse gas (GHG) emissions will need to drop by half by 2030 and then reach net-zero around mid-century.Ignoring the climate crisis could cause the global economy to lose between $150 and $792 trillion by 2100 if countries do not meet their current targets to cut down greenhouse gas emissions.In contrast, it would cost G20 countries between $16 and $103 trillion to limit warming to 1.5 to 2 degrees Celsius. The urgency to limit emissions and the need for urgent action is spurring, countries, cities, companies and people.

Scientists have been crying hoarse about climate change for the last two decades. Why are countries and companies suddenly accelerating the sustainability and climate change action now? There are three main reasons for this. First, new technologies exist that can make the shift to low carbon possible and economically feasible. Secondly, the risks of climate change are already causing damage and the financial system is taking heed, and thirdly, governments are pushing the net zero agenda after realising that this move can generate jobs.

The Net Zero transition 

India plans to reach Net Zero Emissions by 2070. This was announced at the COP26 – UN Climate Change Conference in Glasgow. With this India joins an increasing number of countries that are committing to a low carbon, sustainable future. Prime Minister Modi announced 5 key action points “Panchamrit” to tackle climate change

  1. By 2030 non-fossil fuel generation to increase by 500 GW.
  2. By 2030 India will increase 50% renewable energy.
  3. Carbon emission to be reduced by 1 billion tonne by 2030.
  4. Economy’s carbon intensity will reduce by 45% by 2030.
  5. Net zero emission by 2070.

Success can’t be measured in words, declarations and assumptions. It will be defined by actual results and looking back at the 2020’s as the decade of transformative action. There is much more to do to help leaders in politics and business understand what it really means, and what it will take to get there. Hence, while we need to take a long view, we need shorter milestones that will take us to net zero by 2050. Scientists and experts have consistently said that the sooner we act, the lower will be the cost and the risk. There will be a new generation of people in corporate leadership by 2050 and the current ones may get away by only making declarations for 2050 and doing nothing at all. Hence, 2030 targets and close scrutiny on actions are the only things that will get us to net zero. India’s 5-point plan does just that. While India plans to reach Net Zero by 2070 the transition will begin now to achieve the short term 2030 targets that have been laid out. This will have huge impact on energy, agriculture and manufacturing as we find and promote new ways to grow and make things.

Large investors, governments and businesses are seeing a unique opportunity to drive a shift to a low-carbon future. And the shift to low carbon is not an end in itself; it can drive resilience, prevent crises and lead to growth with better health and wellbeing.  For companies, that are navigating the changing policy and regulatory systems, the writing is on the wall – change fast or become irrelevant. Climate change and digital transformation are creating new risks, and at the same time, new opportunities are opening up too. A new kind of leadership is needed that builds trust, is driven by values and is open to change. 

The transition to a sustainable economy by keeping these things in mind will require new collaborations with customers, communities, competitors and peers, to harness and deploy new innovations. In addition, it will need a new kind of financial system to enable these shifts. The financial world will therefore increasingly measure and value the true impact on society of a business. Businesses will need to embrace new measures to understand their full impact and dependencies on the natural world and society. Measures around non-financial reporting are therefore likely to increasingly become stringent. 

Net zero will be an economic, business and people transition. Therefore, tracking companies’ net zero targets is an important ask. Our research shows many interesting insights.